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How Google Is Getting Ready to Compete With Big Wireless Carriers

How Google Is Getting Ready to Compete With Big Wireless Carriers

By Don Reisinger

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It Starts With Google Fiber

Although it might not seem it at first blush, Google Fiber could eventually become cause for concern among wireless carriers. Google Fiber is only available in a handful of areas now, but Google has said that it will expand its footprint rapidly in the coming months. What Google Fiber offers is a high-speed Internet service that can be easily tapped for wireless hotspots. In addition, it offers television service. Google, in other words, is offering a service that combines high-speed Internet, television and wireless hotspots into one. Sound familiar?

3 of 11

Don't Forget Carriers Are About More Than Cellular

To put a finer point on it, let's make something abundantly clear: AT&amp;T and Verizon, the two top U.S. wireless service providers, are not just operating in cellular. The companies also offer home broadband and television services. That Google Fiber offers high-speed Internet and television services already puts it in direct competition with services like Verizon's FiOS and AT&amp;T U-Verse. In other words, the war has already begun on another front.

4 of 11

Google Is Reportedly Looking Into a WiFi-First Service

Several reports over the last few months have said that Google is eyeing a wireless service that would allow users to connect to either a WiFi network or cellular network to place calls. The offering would search for the best connection—WiFi or cellular—in a given location and seamlessly place calls over that network. The technology is called WiFi-First, which means it would try to connect to wireless networks before a cellular feed and could cut into the revenue of competing telcos.

5 of 11

Google Joins Comptel Lobbying Group

In a rather interesting move last year, Google joined Comptel, an industry lobbying group for companies operating in both wireline and wireless industries. While Google Fiber would certainly qualify as a wireline service provider, a core focus of Comptel over the past several years has been on cellular technologies. News reports in recent months have suggested that Google's decision to join Comptel had more to do with its wireless goals than its wireline business.

6 of 11

Google Could Become a Mobile Virtual Network Operator

While there are countless Mobile Virtual Network Operators (MVNOs) in the industry, there is talk among analysts that Google is on its way to becoming one as well. As noted, Google is at least considering the possibility of offering a WiFi-First mobile service. To do so, however, the company is reportedly in talks with Sprint and T-Mobile to run on top of their networks, like an MVNO. So, if a WiFi signal isn't available for a user, Google's offering would let them connect to the strongest signal between T-Mobile and Sprint. It's an interesting move, but it could be bad news for Verizon and AT&amp;T.

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Google Will Let Cable Companies Prove the Concept

In a note to investors last month, analyst Craig Moffett of MoffettNathanson said that Cablevision's Freewheel service, an offering that allows users to place mobile calls over WiFi, would act as a proof-of-concept for Google. He said that Google had hoped to launch its own service in October 2015, but will now delay it until it can see how customers respond. Comcast, Moffett said, might also jump into the fray before Google, providing even more data for the company to consider as it prepares to compete with the big carriers.

8 of 11

Starbucks Deal Reveals Big Ambitions

A little-known deal occurred in 2013 that could prove to be a major issue if and when Google breaks into the wireless business with its WiFi-First service: Starbucks gave its wireless hotspot contract to Google, taking it away from AT&amp;T. The issue seemed innocuous enough at that time, but it proved that Google was willing to take the fight to telecoms. Now that it might be thinking about a mobile calling service, the deal could prove to be integral to the company's WiFi-First model.

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The Vertical Integration Opportunity Is Massive

One of the major issues that could ultimately attract subscribers to Google's services is its full vertical integration. The company could offer devices, the operating system, the network access and application services when people select its online platform. That's something no other company is doing right now, and it gives Google a distinct advantage if it takes on Verizon, AT&amp;T and the rest.

10 of 11

Google's Approach Avoids Massive Infrastructure Costs

Google could also derive a competitive advantage in the wireless space by not needing to invest billions in building and maintaining the network infrastructure. There is an arms race going on right now, with the major carriers investing heavily in network infrastructure. If Google mainly relies on WiFi networks but also inks deals with smaller carriers when wireless connections are needed, the company sidesteps the massive costs incurred by telecoms to get people online. It's a cheaper alternative that could still provide widespread coverage.

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There's the Public Perception Issue

Google has another advantage over the big wireless carriers. The telecoms are generally disliked by the public. In fact, in a recent JD Power study, the top customer service provider, AT&amp;T, could only muster a mere 75 percent in satisfaction. Brand perception studies commonly place wireless carriers toward the bottom of the rankings. Google, on the other hand, is generally viewed favorably among the many users who are acquainted with its various Internet services. This could help the company win customers away from the big telecoms.

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